First it was GameStop, then it was AMC, and now Wendy’s has been minted as the latest “meme stock” as 2021 continues to see day traders on Reddit boost the price of seemingly random companies. On Tuesday, shares of Wendy’s surged upward 25 percent as Reddit latched onto the stock for sound financial reasons… and also nonsensical internet reasons (the fast-food company sells chicken tenders a.k.a. “tendies” which is a Reddit trader slang for huge profits). It also didn’t hurt that the Wendy’s social media account routinely dunks on its competitors, which the social media savvy traders like. Via CNN:
“Frenzy+scarcity+low volume means minimal buys could push the price quickly,” the Reddit user wrote.
Other Reddit users noted that the Wendy’s social media team has a knack for dunking on McDonald’s (MCD) and other competitors on Twitter. That irreverence could help gain the company new investors as well.
As of Tuesday afternoon, the frenzy on Wendy’s stock continued to trend on social media:
The Wall Street Bets due diligence on Wendy’s is gold.
The catalysts are:
The release of a new summer salad
— Trung Phan
(@TrungTPhan) June 8, 2021
However, Yahoo! Finance editor-at-large Brian Sozzi cautioned readers that this latest stock meme is a different animal than the recent runs on GameStop and AMC. For one thing, unlike the other meme stocks, Wendy’s shares are not being aggressively short sold. Only 4.64 percent of the company’s outstanding shares are being shorted. On top of that, the stock is just plain good to begin with and didn’t “rescuing” from Reddit day traders.
“The reason why Wall Street doesn’t hate Wendy’s is that unlike other meme stocks, Wendy’s is a fundamentally sound business that is growing,” Sozzi writes. Whether that information will matter now that the stock is already a social media favorite will be interesting to watch.
(Via CNN, Yahoo! Finance)